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With access to clean, modern energy, poorer countries look to power ahead through innovation

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Energy is key to global development, but the world’s poorest and most vulnerable nations fare up to six times worse than their more industrialized counterparts when it comes to accessing the vital resource.

In its 2017 report on the world’s 47 Least Developed Countries (LDCs), focused on Transformational Energy Access the UN Conference on Trade and Development (UNCTAD) said that only four of them were on course to achieve internationally agreed targets on energy distribution by 2030.

While they have made great strides in recent years, achieving the global goal of universal access to energy by 2030, the finish line for achieving the UN Sustainable Development Goals (SDGs), will require a 350 per cent increase in their annual rate of electrification, said UNCTAD.

“Achieving Sustainable Development Goal 7 is not only a question of satisfying households’ basic energy needs,” UNCTAD Secretary-General Mukhisa Kituyi said in Geneva, ahead of the report’s publication on Tuesday.

“That in itself has valuable welfare implications, but we need to go beyond […] For electrification to transform LDC economies, modern energy provision needs to spur productivity increases and unlock the production of more goods and services.”

Dr. Kituyi added: “The productive use of energy is what turns access into economic development, and what ensures that investments in electricity infrastructure are economically viable. But that means looking beyond satisfying households basic needs to achieving transformational energy access – satisfying producers’ needs for adequate, reliable and affordable energy.”

To that end, the report notes that renewable energy sources, such as solar and wind power, could have a revolutionary effect in rural areas, home to 82 per cent of those without power in the least developed countries, and help to overcome the historical obstacles to rural electrification.

But non-hydro renewable energy in these countries has so far come mostly from small-scale technologies, such as solar lanterns and stand-alone home systems. While these have brought some progress, they fall short of the game-changing access to power that they need to transform their economies.

Utility-scale renewable technologies capable of feeding the grids and mini-grids necessary not only to power homes, but also to grow businesses and industries, need to be deployed rapidly. But to achieve this, the least developed countries must overcome important technological, economic and institutional obstacles. This will require both the right national policies and stronger international support.

Because energy technologies, and particularly renewable technologies, are constantly evolving, it is critical that the least developed countries gain access to the technologies suited to their particular conditions and circumstances, and that they strengthen the capacity of their energy sectors to absorb such technologies.

The recently created Technology Bank for the Least Developed Countries could help, but developed countries could help even more by living up to their technology-transfer obligations under the UN Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol, said UNCTAD.

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Global energy investment in 2017 fails to keep up with energy security and sustainability goals

MD Staff

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The electricity sector attracted the largest share of energy investments in 2017, sustained by robust spending on grids, exceeding the oil and gas industry for the second year in row, as the energy sector moves toward greater electrification, according to the International Energy Agency’s latest review of global energy spending.

Global energy investment totalled USD 1.8 trillion in 2017, a 2% decline in real terms from the previous year, according to the World Energy Investment 2018 report. More than USD 750 billion went to the electricity sector while USD 715 billion was spent on oil and gas supply globally.

State-backed investments are accounting for a rising share of global energy investment, as state-owned enterprises have remained more resilient in oil and gas and thermal power compared with private actors. The share of global energy investment driven by state-owned enterprises increased over the past five years to over 40% in 2017.

Meanwhile, government policies are playing a growing role in driving private spending. Across all power sector investments, more than 95% of investment is now based on regulation or contracts for remuneration, with a dwindling role for new projects based solely on revenues from variable pricing in competitive wholesale markets. Investment in energy efficiency is particularly linked to government policy, often through energy performance standards.

The report also finds that after several years of growth, combined global investment in renewables and energy efficiency declined by 3% in 2017 and there is a risk that it will slow further this year. For instance, investment in renewable power, which accounted for two-thirds of power generation spending, dropped 7% in 2017. Recent policy changes in China linked to support for the deployment of solar PV raise the risk of a slowdown in investment this year.

As China accounts for more than 40% of global investment in solar PV, its policy changes have global implications. This confirms past IEA reports that have highlighted the critical importance of policies in driving investment in renewable energy.

While energy efficiency showed some of the strongest expansion in 2017, it was not enough to offset the decline in renewables. Moreover, efficiency investment growth has weakened in the past year as policy activity showed signs of slowing down.

“Such a decline in global investment for renewables and energy efficiency combined is worrying,” said Dr Fatih Birol, the IEA’s Executive Director. “This could threaten the expansion of clean energy needed to meet energy security, climate and clean-air goals. While we would need this investment to go up rapidly, it is disappointing to find that it might be falling this year.”

The share of fossil fuels in energy supply investment rose last year for the first time since 2014, as spending in oil and gas increased modestly. Meanwhile, retirements of nuclear power plants exceeded new construction starts as investment in the sector declined to its lowest level in five years in 2017.

The share of national oil companies in total oil and gas upstream investment remained near record highs, a trend expected to persist in 2018. Though still a small part of the market, electric vehicles now account for much of the growth in global passenger vehicle sales, spurred by government purchase incentives. For electric cars, nearly one quarter of the global value of EV sales in 2017 came from the budgets of governments, who are allocating more capital to support the sector each year.

Final investment decisions for coal power plants to be built in the coming years declined for a second straight year, reaching a third of their 2010 level. However, despite declining global capacity additions, and an elevated level of retirements of existing plants, the global coal fleet continued to expand in 2017, mostly due to markets in Asia. And while there was a shift towards more efficient plants, 60% of currently operating capacity uses inefficient subcritical technology.

The report finds that the prospects of the US shale industry are improving. Between 2010 and 2014, companies spent up to USD 1.8 for each dollar of revenue. However, the industry has almost halved its breakeven price, providing a more sustainable basis for future expansion. This underpins a record increase in US light tight oil production of 1.3 million barrels a day in 2018.

“The United States shale industry is at turning point after a long period of operating on a fragile financial basis,” said Dr Birol. “The industry appears on track to achieve positive free cash flow for the first time ever this year, turning into a more mature and financially solid industry while production is growing at its fastest pace ever.”

The improved prospects for the US shale sector contrast with the rest of the upstream oil and gas industry. Investment in conventional oil projects, which are responsible for the bulk of global supply, remains subdued. Investment in new conventional capacity is set to plunge in 2018 to about one-third of the total, a multi-year low raising concerns about the long-term adequacy of supply.

This edition of World Energy Investment, which is being released for free this year, provides a wealth of data and analysis for decision making by governments, the energy industry and financial institutions to set policy frameworks, implement business strategies, finance new projects and develop new technologies.

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Energy

Off-grid Renewables are Growing, Bringing Socio-economic Benefits to Millions

MD Staff

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Off-grid renewable energy has witnessed spectacular growth over the last decade. Since 2008 capacity has trebled and the number of people in rural communities served by the technology has witnessed six-fold growth. Today, up to 133 million people are receiving life-changing access to low-cost, secure renewable energy and benefit from the socioeconomic impact access delivers. Global off-grid investments in 2017 reached USD 284 million.

These findings feature in a new IRENA brief launched during the UN High-Level Political Forum in New York. The paper, entitled: Off-grid Renewable Energy Solutions, Global and Regional Status and Trends, builds on IRENA’s statistical analysis to offer a global picture of the sector’s trajectory and impact. The data highlights the extent to which off-grid renewables are emerging as a mainstream solution to the expansion of electricity services all over the world, contributing to sustainable development goal 7 (SDG 7) by broadening the reach of electricity beyond existing grid infrastructure.

“Off-grid renewable energy is an important contributor to energy access across the developing world having witnessed widespread, rapid growth in deployment over the last few years,” said Dr. Rabia Ferroukhi, Deputy Director of the Knowledge, Policy and Finance at IRENA.  “Our analysis captures this momentum whilst shedding light on the need to step-up efforts towards 2030 Sustainable Development Goals.”

Africa has emerged as a dynamic, fast-moving hub for off-grid renewables. The development of solar lighting solutions and innovations in deployment and financing models, such as pay as you go options and mobile payment platforms have contributed to Africa’s rapid advances. The continent’s off-grid industry now serves around 53 million people – the equivalent of the entire population of South Africa – up from just over two million in 2011.

The brief identifies Asia as a global leader in off-grid renewables capacity deployment. Today, up to 76 million people across the continent may now benefit from such power sources.

South America, home to some of the highest rates of electricity access in the developing world, has also witnessed off-grid renewable growth the brief suggests, where the technology is considered key to ‘last mile’ electricity access.

Off-grid renewable energy solutions are being deployed to provide electricity services for a wide range of end-uses, including for powering agriculture, telecommunication infrastructure, healthcare centres, schools, and rural enterprises. The paper emphasises that linking delivery of off-grid solutions to energy service delivery can unlock substantial socio-economic benefits, contributing to multiple SDGs.

While dramatic cost reductions have been the primary driver of this acceleration, it is the multifaceted socioeconomic benefits that provide the greatest incentives for its deployment. Renewable energy’s centrality to the SDG 7 goal on universal access to clean, reliable and affordable energy against a backdrop of a billion people who still live without it, is unquestionable. However, beyond energy itself renewables are a key contributor to sustainable development, generating jobs, stimulating growth, ensuring resource security and improving health.

The paper notes that in Bangladesh, around 133 000 jobs have been created through a Solar Home System programme and an off-grid renewables initiative in Rwanda aims to generate 7 000 jobs whilst delivering energy access to almost 80 000 people. Similarly, incomes in rural households benefit from lower cost solar lanterns, and remote health and educational facilities are enhanced through consistent availability of power.

“Renewables are a central pillar of SDG 7 and represent one of the most effective and economicmeans available in the pursuit of universal energy access,” said Rabia Ferroukhi, Deputy-Director of Knowledge Policy and Finance at IRENA. “Yet beyond this, we are now beginning to truly understand the way in which distributed renewable electricity is transforming the lives of those receiving from it, bringing stability and opportunity to millions of people around the world.”

Read the brief on the Off-grid Renewable Energy Solutions and the six case studies developed to showcase the socioeconomic impact of off-grid renewables in South East Asia.

IRENA

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Energy

CPEC and Pakistan-China Energy cooperation

Venita Christopher

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The demands of global energy are substantially rising day by day in the 21st century, whereas the dependency on fossil fuels like coal, oil and natural gas have become a serious concern which is about 80% of the world’s primary source of energy. The concerns about fossil fuels are due to their ever rising prices and their negative impact on the environment due to the harmful emission of greenhouse gases. Therefore, in this context the reliance on nuclear power energy is considered by various countries, including Pakistan, as a good alternative option of energy supply, which is comparatively cheaper also.

Pakistan has great strategic importance in South Asia because of its location, its dynamic young population, its vibrant economic potential, being a nuclear power, and now being a strategic partner of China in the backdrop of the construction of the China-Pakistan Economic Corridor (CPEC).The CPEC is a flagship project of China’s Belt and Road (B&R) initiative and the completion of CPEC is likely to bring major economic advantages to China, Pakistan and South Asian region.

Like many other countries, for its economic development based on enhancing its industrial and agricultural production, energy is very important for Pakistan and it needs to address its current energy crises on an urgent basis. In this context signing of the CPEC agreement with China by Pakistan in 2015 is considered as a milestone achievement, as it includes many electricity generation projects, which will help address energy shortages of Pakistan.

Apart from developing other means of electricity generation in Pakistan, China is already helping Pakistan in nuclear energy production by supplying nuclear power reactors, under IAEA safeguards based on agreements signed in the field of nuclear cooperation. Apart from installing Chashma 1 and Chashma 2 power plants, which are already producing electricity in Pakistan, in 2017 China has signed another deal with Pakistan to also install Chashma 3 and Chashma 4 power plants. Out of these each power plant, after completion, will produce 1000 megawatts of electricity. As part of the CPEC project, China is also building two HUOLONG ONE nuclear reactors in Karachi that will become ready to use by 2021.

After signing the CPEC agreement China is very keen to help Pakistan in the energy production, as energy is required not only for the construction of CPEC projects but also for its subsequent operation. This is because China is also going to get huge trade benefits by trading with the outer world using the CPEC. In other words, apart from helping its friend Pakistan in energy production, this cooperation also serves China’s economic interests in a major way. In this context, the CPEC is a win-win project that serves Pakistan and China’s interest in a similar way.

As China is doing a lot to advance its interests by expanding its economic production by basing on its CPEC related exports, Pakistan should also take the CPEC as a big opportunity to develop its economy to become economically self reliant. In this context, it should focus on completing the construction of the CPEC and its related energy projects on time, so that it addresses its energy shortages and quickly moves on towards its economic development.

In fact, it is more important for Pakistan to work harder for completion of the CPEC related projects and make use of the CPEC to advance its industry and agriculture, increase trade, attract foreign direct investment and increase its revenues. This is important because Pakistan’s economy needs a major boost to recover from its ever increasing budget deficits, inflation, domestic and foreign debt situations,widening gap of balance of payments due to constantly declining exports and falling foreign exchange reserves.

This is also important to repay the domestic debt and foreign debt in order to save Pakistan from becoming a defaulting state in the coming years. Above all it is necessary to avail the opportunity of reaping CPEC related economic advantages to develop Pakistan’s economy in a reasonable time frame to meet its aforementioned obligations and finally to bring prosperity to Pakistan and its people.

In the light of above it is logical to say that Pakistan and China’s cooperation in the energy field is beneficial for both countries and CPEC is a project that helps Pakistan in meeting its energy shortages, and it will be equally beneficial to Pakistan and China to advance their economic interests. Rather CPEC related energy projects and trade will be much more beneficial to Pakistan to meet its above discussed economic challenges.

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